Judge Rules SunTrust, M&T Bank Customers Can Pursue Dispute Claims

A judge has ruled that customers of SunTrust Bank Inc. and M&T Bank Corporation can file class action claims against these institutions in federal court, and are not limited to using arbitration to resolve business disputes.

According to the ruling by U.S. District Judge James Lawrence King in Miami, customers who wish to file class action litigation against these companies over disputes relating to overdraft fees can do so. The court found the arbitration clauses in customer agreements to be unconscionable. San Diego business litigation lawyers and consumer groups have welcomed the ruling.

It’s not just SunTrust and M&T that are named in the decision. Customers have filed claims against more than 30 banks over their overdraft fee policies. The customers had alleged in their lawsuit that these banks reordered transactions in order to increase overdraft fees. According to the customers, the banks did not process transactions in chronological order, as other many banks do, but from highest dollar amounts to lowest.

The banks claimed that customers were compelled to use the arbitration process, rather than filing a class action lawsuit. The bank relied on the U.S. Court Supreme Court decision in AT&T Mobility LLC v. Concepcion, which held in favor of businesses using arbitration to settle disputes with customers. In the AT&T case, the U.S. Supreme Court ruled that a federal law favoring arbitration clauses preempts state laws allowing consumers to file class action suits. However, in this case, the court found the AT&T ruling should be applied on a case-by-case basis.